Fitch Places U.S. Under Review For A Credit Downgrade

Fitch Ratings, one of the big three credit ratings agencies, issued a warning shot today, saying that while it affirmed the United States' AAA credit rating, it was placing it on "rating watch negative."

In other words, it was placing the country's long-term credit rating under review for a potential downgrade.

"The prolonged negotiations over raising the debt ceiling (following the episode in August 2011) risks undermining confidence in the role of the U.S. dollar as the preeminent global reserve currency, by casting doubt over the full faith and credit of the U.S.," Fitch said in a statement. "This 'faith' is a key reason why the U.S. 'AAA' rating can tolerate a substantially higher level of public debt than other 'AAA' sovereigns."

Reuters reports the U.S. Treasury said the threat from Fitch is a reminder of just how close the country is from defaulting for the first time in history.

"The announcement reflects the urgency with which Congress should act to remove the threat of default hanging over the economy," a Treasury spokesperson told Reuters.

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Transcript

STEVE INSKEEP, HOST:

NPR's business news starts with a U.S. credit rating threat.

(SOUNDBITE OF MUSIC)

INSKEEP: Fitch Ratings did not downgrade the United States, but took a step toward downgrading America's triple-A credit status, putting U.S. Treasury bonds on ratings watch negative - that's the term.

The Chicago-based company says this move was made over the threat of a government default. Here's the words from the statement: Although Fitch continues to believe the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a U.S. default.

The government is expected to begin to run out of cash to pay its bills as early as tomorrow - possibly a few days later if a deal is not reached in Congress.

Now Moody's says it does not have plans to downgrade its triple-A rating on U.S. debt, while Standard and Poor's made the downgrade in 2011 the last time Washington flirted with not raising the debt ceiling. Transcript provided by NPR, Copyright NPR.